welcome to "squawk alley" for a monday morning, i'm carl quintanilla. john ford has the morning off. joining us this morning, good morning to you. >> hey, how are you? >> good. 22 days until the election. new york times reports peter thiel is donating to donald trump's campaign. while it may be a significant number, reportedly pales in connection to silicon valley's support for hillary clinton. it's interesting even as some are painting a picture of

trump's campaign taking a vastly new direction, thiel is still in. >> yeah, it's also a bit puzzling. it's pretty late to give this amount of money, and it seems like, you know, the polls are bad for trump, so it's strange that he's giving it now when things don't look good. you would wonder why he hadn't given money earlier when it might have had more effect. i'm not sure what the point is, other than sort of there were some questions the last couple weeks whether he was still all-in with trump. some reporters had asked him and he hadn't really answered, so this sort of answers that question, but beyond sort of signaling he's still with trump, i'm not sure what the actual purpose is. >> farhad, for someone whose estimated net worth is $2.7 billion, what is the amount itself say to you? because other trump supporters have given vastly larger amounts towards a campaign, and i'm just wondering if you think this is him putting his money where his mouth is, or if this is

basically doing as little as possible? >> right, it did seem like a small amount, too. lots of people in the valley that are clinton supporters have given much more and made a big deal about the amount they are giving. this is a relatively small amount for how much, you know, he's worth, given late and kind of quietly. so it's puzzling. i mean, you know, it's, obviously, money to trump, so it obviously signals some support, but it's not that much and it's pretty late, so it doesn't signal, you know, the wholehearted support. it's an odd thing. >> we know thiel is a lightning rod of sorts, or at least relatively isolated in the valley. people know about his support for trump, he spoke at the convention. i wonder, does this change how people view him out there right now? >> i wonder about that. i mean, i don't think so. i don't think the donation changes anything specifically. it just signals, you know, he

has the position he had a few months ago. people, you know, he was an outlier before this trump donation. i think the sort of underscored how much of an outlier he is politically. i don't think it changes anything in sort of the business of the valley, you know, i'm not sure, you know, why this week said it's still going to, you know, be, you know, work with thiel. i don't think thiel's position on the facebook board is going to change. i don't think it sort of changes anything in the willingness to work with peter thiel. he's still, you know -- he's got a lot of money and, you know, start-ups are going to work with him. i'm pretty sure. i don't think it sort of changes, like, the political calculus in the valley, as far as i can tell. >> what do you think would change that, farhad? because politics is inherently personal. people donate to political causes they feel strongly about all the time, but is there something you think thiel could say or do to cause people to change their minds about that?

>> i mean, i wonder if he comes out in support of, you know, something like if he comes out in support of donald trump's immigration positions, for example, that could change it. if he comes out more in support of donald trump's specific policies that the valley, people in the valley don't like, i think that could change it, but i'm not sure he would. and he's also sort of -- it's priced into peter thiel that he's a political outlier here, so i don't think he can do much that surprises people, and i think that's perhaps his calculus, right, he has been on the fringes of politics in the valley for a while, so it doesn't, you know, he had sort of freedom to do this, i think, in a way that didn't change his business. and so he is sort of pushing that limit, you know, as far as possible. >> we're going to watch that, obviously, be sure to tune into the third and final presidential debate coming up this wednesday night.

you can catch live coverage here on cnbc. coming up next, should apple make a big push in the content wars? goldman suggesting apple should go big in content and launch an amazon prime-like service, bundling iphone, apple music, apple tv, and live sports for $50 a month. goldman says apple's deep pockets will help it price its prime-like service below the competition. that would be a big bet, farhad, the likes of which we haven't seen apple committed to, at least not yet. >> yeah, it's an interesting idea. they have the subscription program for the iphone, right, you can get an iphone for about $32 a month or something like that, and then if you consider that, you know, when you go to buy the iphone they tell you you can get tv service, music and movies for $10 to $15 a month more, that sounds like a pretty good deal. the trouble is, those alternatives are already available from, you know, from amazon, from netflix, so it's hard to see what they could add specifically that competes with

that, and the other thing it would have to be is sort of exclusive content to apple devices only, which is an odd thing, right, it's unusual in our media world to have, like, a tv show that only works on an apple device or certain kind of device. even exclusive subscriptions, things like netflix and amazon work on pretty much all devices, so it would be, you know, an unusual kind of media deal. but it is an interesting idea. i think that it could work. apple has had trouble sort of convincing content companies to go to exclusivity and the biggest hurdle is the tv plan. for years it's been reported they've been working on a so-called skinny bundle, like, you know, a cable delight subscription for fewer channels that comes over the internet and haven't been able to get that done. it's hard to see if they could. >> in the meantime, farhad, this has been a hardware company where services and the revenue

the company earns from services fits squarely into that other category. do you think it's about time apple begins making other bigger part of its business or diversifying more into services and getting more of its hardware customers into services than have up to this point? >> yeah, i mean, i think to be fair that's what they've been signaling, you know, in the last few earnings calls they have said the services revenue is the fastest growing part of their business and it's also pretty profitable, so they are pushing deeper into it. the difficulty there, as i said, there's lots of competition in that market and it's hard to see what they could do that's better and, you know, more apple-like than the other companies have done. they are starting in this relatively late, and the other thing is, they haven't been that good in services. i mean, this is a company known for hardware and cloud services, whether it's, you know, content or whether it's, you know,

artificial intelligence-like services like siri, they haven't been, you know, the best of breed so far. so they have to get much better than they are right now. >> shots fired right there. i like it. moving on, finally, farhad, to tesla. german regulators telling the company to stop including the misleading autopilot feature in advertising, as elon musk decides to delay the announcement scheduled for today to wednesday saying it, quote, needs a few more days of refinement. do we have any clue what this unexpected announcement might be? >> i don't. i heard it seems likely it's an autopilot, you know, upgrade of autopilot, which they've been talking about for a while. they do have this difficulty with autopilot, it's called autopilot, implying it drives itself without any need of the human, and that's not how it works. you're supposed to pay attention and some of the accidents that

have happened have been because the humans, the drivers, weren't doing what they were supposed to do and there were lots of youtube videos of people testing the limits of the system. so it does seem they have a mismatch between the marketing of the system and the reality, and the marketing, i think, has been crucial to their sales. musk himself and in the way they've marketed their car, it's been -- the message has been they are far out ahead of competitors and this car can basically drive itself. that's not what it actually can do. you're not supposed to use it that way, but i think it's been key to one of the main reasons people want a tesla and are willing to pay substantially more for that car than other cars. >> so how would you rebrand it then, how would you call it more true to what it is and appease regulators by being more forthcoming about that? >> right, any other name sounds not as good, right. like the honest name would be

semi autopilot, but doesn't sound great. >> somehow i don't think you're going to go -- tesla marketing is not going to hire farhad majoo after that. >> yeah. you have to push the limit with these names, but i think that goes too far. it's not autopilot, it doesn't drive itself, but that's what it claims. >> certainly a discussion about that product since the beginning, whether or not the title was truly, truly honest. farhad, we'll see what the week brings, thanks so much. meanwhile, let's get a check on the markets, which have been slipping further into negative territory as wti slipped below $50 a barrel. september industrial production today, which was largely in line. you can see the dow is down 25 points, the s&p is down 3, the nasdaq is down 6. we're also watching shares of caterpillar, the company announcing the ceo will retire next year after overseeing cat's

longest sales decline in history. the company's executive will take over as ceo effective at the beginning of the year. and check out shares of bank of america, the company beating estimates for the most recent quarter. strong results in trading, just like at other banks, helped offset weaknesses in the consumer business. the shares are just slightly negative at this hour. finally, lendingclub getting hit extremely hard today, the online lender saying it will start upcharging riskiest customers more to borrow. it's the fourth time the company has had to change its loan pricing this year to keep returns attractive for investors and keep the risk accurate. stock is down 5%, off the lows, but we're still going to keep an eye on it. when we come back, is original content paying off from netflix? what to expect after the bell tonight. then tuning in for trump tv. why allies might be working on a post-election back-up plan. later on, more on our

exclusive with pepsi when "squawk alley" continues after the break. ♪ ♪ ♪ the highly advanced audi a4. ♪

joining us now, a look at what to watch. julia? >> hey, kayla. in the face of more competition than ever and growing concern about slowing subscriber growth in the wake of higher prices, investors are watching to see whether netflix can turn things

around. the stock is down about 14% so far this year after being the best performing stock in the s&p 500 last year. the company projecting it will add 2.3 million new subscribers, 2 million of them from overseas. that's an acceleration from when subscribers fell short of netflix's own projections, but also far lower than the 3.6 million subscribers the company added in the year ago quarter. analysts are looking for revenue of $2.2 billion, up from a year ago, while earnings per share are projected to drop to six cents and seven cents a year ago. in addition to all these numbers, ceo repacings will likely weigh in on the impact of the subscription price increase and how it's shipped to original produced shows will impact its total spending over time. you also may see updated expectations for the potential size of netflix's total market. some analysts are questioning how big the potential market is in the face of growing

competition from amazon and hulu and others. goldman sachs just recommended that apple launch a subscription video bundle. that could be a big blow to netflix. while we expect an analyst question or two about the reports of acquisition talks, things are likely to stay focused on netflix's organic growth. kayla? >> for more on netflix, let's bring in greg olsen, who has a $220 price target on the stock. you think there are good things ahead, but what happens this quarter after the company last quarter had to apologize for volatility? are they going to be in the same boat? >> yeah, you know, it's been rough the last couple quarters. i think this quarter is going to be more in the okay versus great category, and i guess what i mean by that, there's been a lot of talk about domestic sub ads being low, a lot of media reports, analysts reports suggesting they are going to do less than the 300,000 net ads that they've guided to, and that could very well be the case.

i think, though, this is all about an expectations game and expectations are low. there's been so much talk about them missing the domestic sub ad number that i think it's unlikely, you know, a slight miss there would have any real impact on the stock, assuming internationals stays strong. >> how much investor demand is there for this stock, given its recent prevails, michael, because it's had the luxury of not having to provide ratings, to have to engage focus groups. i mean, they don't do a lot of things that traditional media companies have to, but i'm wondering if you think investors will want more transparency if domestic subs keep bumbling. >> well, i think there's definitely an interest in having more transparency around the content. i think, though, that assuming international subs continue to grow and, you know, this is a long term kind of up into the right type of story. you're going to have quarters where you have things like the ungrandfathering of the price increase or new competitors that

enter the market, things like that, but generally they are the leader in the space, so there's going to be, certainly, interest in seeing more ratings around their content, seeing more specifics around the spending on that content, but generally they are in a leadership position of a growing category. >> mike, i've seen some charts that look at the number of discreet titles on the service. in other words, the number of things you can click on to watch and that's actually topped out or in some cases come back in as they spend more money on original content. so if the library is less interesting, x original content, how much of a liability is that? >> yeah, i think that's absolutely true. i think the library is shrinking, but i think it's purposeful. in other words, i would say that the content that they are dropping is kind of the lower-tier content. as far as the independent content they are keeping, they are keeping quality content that's bringing in viewers and they are dropping off some of

the lower tier content in favor of originals, and i think ultimately it's the right strategy. you want a unique offering and that's the way to do it. >> how do you measure, mike, the return on investment for what the company is plugging into original content and, you know, big ticket contracts like what they paid chris rock, $40 million for two specials? >> yeah, ultimately that comes down to subscriber retention. that's really how you measure it, and right now we're in the midst of a period where subscriber retention looks a little fuzzy because of the ungrandfathering of the price increase, so i think what we really need to see is as we get through the ungrandfathering, which ends basically partway through q4, we're going to see to what degree does sub ads continue to grow and we'll see at that point if the spend on incremental content is working. >> all right, well, we'll see what that locker room thesis looks like when we get some indications this afternoon. mike, appreciate your time this morning.

>> thank you. >> mike olson from piper jaffry. when we come back, the cloud wars are heating up, which companies are poised to make a big splash. and big news from ben lerer. his take on the future of digital media when we come back.

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a lot of consolidation in the cloud space lately shaking things up in the industry. live in san francisco with the pulse. hey, josh. >> that's right, carl. so amazon and microsoft are using their size and scale to expand their leads in this market. the most recent example, amazon partnering with vmware. that means customers will be able to run their software on private servers, as well as on amazon web services, and that could help strengthen amazon's lead in the cloud. it already commands 31% of the market, according to cinergy research group, but microsoft's ceo is making moves of his own. for example, he recently announced a new allowance with

adobe, which says microsoft azure will be its preferred cloud platform, and that could be a smart way to try and box out the competition. >> all these clouds chess, microsoft-adobe partnership, that's clearly taking aim at salesforce. so salesforce is a leader in crm, their own marketing cloud, in order to have a complete offering, microsoft and adobe teamed up. >> now, one question for investors, what do these recent partnerships mean for the other cloud players? remember, they've been busy, too. ibm also has a partnership with vmware and google can build data centers, as well as any internet giant on the planet. the truth is there won't be one king of the cloud. looking ahead, vcs say cloud companies will offer different areas of expertise, some in a.i., others in data analytics. in other words, this is going to be a multi-cloud world.

one thing is certain, though, there's going to be a lot of business to go around. by 2019, nearly 90% of work loads will be in the cloud, according to cisco. guys, back to you. >> thanks so much, josh lipton on the cloud wars. still to come on "squawk alley," markets closing, and more from our exclusive interview with pepsico chairman and ceo indra newy. that's when "squawk alley" returns. they may want the latest products and services, but they demand the best shopping experiences. they're your customers. and by blending physical with digital, cognizant is helping 8 of the 10 largest u.s. retailers meet their demands with more responsive retail models... ones that transcend channels and locations, anticipate expectations... creating new ways to engage at every imaginable touch-point. it's a new day in retail, and together, we're building the store of the future. digital works for retail.

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- we had to think a little more seriously about saving money for the future and for the kids and for their college funds. we thought, "well this airbnb is actually a great way to pay those extra bills." - every bit of extra money helps these days. we have a retirement fund of our own and i take a draw on it. i don't want to take too much either because i don't know what life is going to bring to me. i get to keep 97% of my rental price. the extra income i get from airbnb has been a huge help. - airbnb has helped me so much financially especially starting my own business. san francisco is such an expensive place to live. the way people work and travel is changing. the guests are now able to stay longer, stay five days, enjoy another day in san francisco and spend more money in the neighborhood. my guests are able to extend their stay and spend more money on activities and restaurants. - the extra income that i get from airbnb has been a huge impact in my life.

here's your cnbc news update at this hour, the ongoing battle in aleppo has taken a huge toll on one family. officials say 14 members of the same family were killed in the latest round of air strikes. since sunday, at least 45 people in two neighborhoods were killed as the syrian army stepped up offensive on the city. the u.s. and britain are considering sanctions against syria and possibly russia as conditions get worse in the war torn city. well, civil trial under way today in pennsylvania to determine if penn state should pay for a claim the university mistreated a former assistant coach who provided key evidence

to convict jerry sandusky. mike mcqueary claims the school retaliated against him after he reported he saw sandusky sexually abuse a boy in a team shower. mcqueary was put on paid leave and his contract was not renewed in 2012. he's looking for $4 million in damages. north carolina emergency officials estimate hurricane matthew caused $1.5 billion in damage to more than 100,000 homes, businesses, and government buildings in the state. two more bodies were recovered over the weekend, bringing the death total in north carolina to 26. officials say figures could go higher as they continue to survey the damage. and michael jackson is still setting records. forbes says the king of pop earned more than any other celebrity, living or dead. jackson's estate took in $825 million in pre-tax earnings. the huge payday was largely due to the sale of half of the sony music publishing catalog. that's your cnbc news update for this hour. now let's get back over to

"squawk alley." >> thank you very much, courtney reagan. let's get the close in europe and the uk this morning. seema modi is back at hq, hey, seema. >> stocks moving mostly lower, led by declines in the energy sector, but it's really the bond market stealing the spotlight on monday. german yields rising to a four-month high ahead of this week's ecb meeting. more on that in just a moment. meantime, uk gilt yields slower over concern of the brexit, but portugal yields are falling to a one-month low after investors slashed 2014, this is seen as a positive development ahead of its credit rating review on friday. talk about stocks, down more than 8%, the publisher reporting disappointing nine-month sales citing weakness in the north american higher education market. there's also some more news around deutsche bank, reports say deutsche bank is discussing

a cutback in u.s. investment banking operations, looking to seek money as it seeks a settlement deal. shares down fractionally on the day. if you thought it was busy in the u.s. with earnings, check out what's in store for europe, inflation data comes out tomorrow, more chatter around the bank of england allowing britain's inflation target to overshoot 2%, so something to watch out for tomorrow. in the meantime, foreign ministers meeting in luxembourg, plus the ongoing tensions with russia and prime minister of italy, matteo renzi visiting the white house ahead of, of course, its key referendum december 4th in italy. lastly, as we said, the ecb meeting coming up on thursday. wide consensus is we're not expecting any major action from mario bradraghi, but given the reports earlier this month the ecb was looking to taper the program, that will be in focus and keep an eye on the eu

euro/dollar exchange rate. back to you guys. >> thank you very much, seema modi. a major new digital media company joining the fray, group nine media was conformed by brands including thrillist, now this, dodo, picking up a minority stake for $100 million, discussing the future of digital media is ben lerer, former ceo of thrillist. we want to mention nbcu has an investment in group nine. this is a big deal. what are you seeing at this moment that sort of pushed you into this is this. >> yeah, well, i think we see consolidation coming. this happened in the cable business in the '70s and '80s as the cable networks emerged and ended up banding together to build the vai ya comes and time warners of the world and digital media, the pipes have changed, so while linear tv pipes are no longer the dominant pipes for content distribution and

discovery, it's the pipes owned by google, facebook, and snapchat, so these assets are a collection of brands that are really built on these new pipes and i think putting them together creates something forceful. >> this is a lerer family affair, with a few of the brands being run by members of your family. is this a defensive move, is this to keep this all close to the vest and not be acquired by others? >> it's a great question, i think it's an offensive move and defensive move. it's defensive with the power that facebook and google yield right now in the industry, you want to avoid being a brand, even a strong brand, that's floating out there on your own. at the same time, it's really an offensive move, because collectively, we have incredible reach. i mean, it's almost 4 billion video views a month, second only to buzzfeed in the entire digital world, and i think for us and for our marketing partners, it's an opportunity to really step up and deliver a kind of solution that i always wanted to be able to offer at

thrillist and we just never had the scale for it and audience depth across all these different verticals, and now we can really play with the big boys. >> so for the legacy guys, the huge behemoths that you're talking about, it seems like their strategy so far is to take a stake in those like you who are doing it. why is it so hard to do organically from within? >> it's really hard to do, first and foremost, because they are built on a cost structure that doesn't work for the digital world. you know, the tv, the legacy tv structure is a minute of content for $50,000 and a world you can afford to spend $500 on it, so just sort of breaking that down, as well as the fact that there are headwinds. i mean, the linear bundle is going to get thinner. consumers are moving to new platforms for consumption, so the challenges that are coming to the tv business make it hard to not, you know, you have to focus on defensive measures, protect your core business, how can you also go and build these new businesses, and so this is a

way for discovery to go focus on its core business, which is strong, but which has headwinds and at the same time take a meaningful stake in something for the future. >> not every day a media company gets a lump sum of $100 million. how do you spend that? do you see yourself rolling up more properties, or is that just about operating? >> well, it's a combination. i don't want to go and take $100 million and go and spend it. i think we want to use it as an -- there's the option to go buy new things, but to be frank, for the next four, five, seven, eight months, i need to put these together, not break the momentum of existing brands, and recruit great talent at a high level. long term, it gives us flexibility, but i'm not going and planning to go burn $100 million in the next 18 months. >> if you do, let us know. >> totally. >> speaking of building brands from scratch, story today about the trump campaign, jerry cush

her making approaches about how you would begin to do that. is that easy to do? >> well, it's definitely not easy to do. rea, who was named in the story, is our banker and a great friend, and i think people made more of that than really needs to be made of it. i think what it shows is the trump campaign is lying and they actually plan to do this, but at the same time, this is so hard. building a media business from scratch is almost impossible. >> you would admit, their viewer base is ready to go. >> by the way, the breitbart connection seems to exist, as it stands now, so who knows whether it would be building out of breitbart, whether it would be taking an existing asset and buying it and putting it together. it's really hard to say what, you know, what their plan forward is, but, yeah, they could go -- they have the money, they have the backing. they could go and do this. i pray that they don't for so many reasons. >> what happens to page views

and ad spend after the election, though? how do you go about contingency planning for november 9th? >> well, so fortunately none of our brands are too reliant on that. if anything, i think it's taking attention away from the kind of news we're generally covering, but this news cycle, i mean, what's even going on in the world right now? it is so incredible to see how much attention this campaign is getting. you have to imagine while it won't be trump four years from now, this is i think the new normal, you know, the news -- this is changing the way that politics and news are going to operate for, like, the rest of mankind. i really do think so. >> i think a lot of people agree. this is just the beginning of something. it's great to have you, welcome, congratulations. >> really appreciate it. >> group nine, you're going to hear a lot more about them in the months and years to come. >> i hope so. let's get a market flash here. >> carl, we're watching flairs of pandora, they are down about 3% to 4% right now. stock is on track for its

nine-day losing streak. meryl lynch down graded the stock to underperform, krietding struggling ad support. the subscription on demand market for music is increasingly crowded. shares down about 8% year to date. although we should point out the majority of analysts, over half of them, say it's a buy rated stock. back to you guys. >> all right. maybe that's because it's a potential buyout. we'll see. thank, dom. still to come on "squawk alley," pepsico taking a fresh look at vending machines. what ceo indra nooyi had to say about that up next. later on, the home featured on "full house" is going green. we'll take you there live when we return.

we have a full house of market movers on this fifth anniversary of the half-time report. in about 20 minutes we kick things off with perhaps the most successful hedge fund manager ever, david tepper. speaking of great investors, the always interesting and outspoken carl icahn next today. after that, one of the most successful bond investors of all time, jeffrey gundlach. going to be a huge day, huge week, we're excited about it, of course, and we'll see you in about 20 minutes with that lineup. >> we can't wait just for today, scott, but for the rest of the week. walk us through the days to come. >> we have over the next few days, we're going to have jamie dinon, tomorrow nelson pelzer,

keith meister, activist investors, big time investors, barry rosenstein and we'll end the week with robert kraft, might as well talk football, as well, with rob kraft. his guys are off to a ridiculously good start, despite the adversity at the beginning of the year missing tom brady. he has a great business acumen, as you know. we'll talk about that, the nfl. but i can't wait for today, david tepper, to have him on is a rarity, as you know. especially with the markets where we are, it feels like a good time to hear from the t teppers and the icahns of the world, and the gundlachs of the world with the fed and interest rates backing up a bit, so we're ready to go. >> gundlach has said it's time to get defensive. what do you think he'll say today? >> you know, it's interesting in that, excuse me, janet yellen spoke last friday and jeffrey gundlach took that to be he

thought they were going to be more accommodative for longer, yet had another fed speaker on friday, now you have stan fischer today about 12:15, so there's a lot to react to. i'm interested in how he is investing in this environment and how he thinks that all of you who are watching should be investing in this environment with so much conflicting fed speech around and more seemingly coming every day. >> i just can't believe it's been half a decade. half a decade of the half. >> you know, i can't either, and look, i know you feel the same way and our colleagues do, who get to do this, we're lucky. we're given the keys to the car, carl, by, you know, mark, nick dunn, everybody else around here. we get to drive it. it doesn't go anywhere without the awesome people behind the scenes who do everything to make the show and the car go. it's a testament to them. i'm just lucky to be able to sit here, have conversations with people like tepper and aicahn ad

everybody else, but nothing without the pit crew who makes it all go. that's, if anything, what gives us a chance to celebrate, all of that hard work. >> we will see you in about 16 minutes, scott. thanks so much. >> thanks. >> back at hq. meanwhile, pepsi's big announcement this morning, company's initiative to cut calories in its beverages. our sara eisen sat down with indra nooyi and is back on set. >> hi again, carl and kayla. as part of pepsico's plan to change the way we eat, it is looking to change the way vending machines are stocked. take a look at their newest product. >> because millennials tended to go to convenience stores. now we're saying, hey, we know vending machines are ubiquitous, why don't we put the right assortments to bring the excitement back to vending machines. >> the vending machine is not growing. >> this will revitalize it in a big way, but more importantly,

we are telling consumers, if you want healthy products, doesn't have to be a treasure hunt. wherever you are, it's going to be available. arm's length we're going to have it available. >> any tech corporations where this is going to pop up? >> oh, it will definitely pop up in california and all of the tech companies, and i think when we scale up to produce this, 20,000 machines was a lot, because the industry was sort of slow. we've now given new life to this industry. when we start to launch this in 2017, believe me, the targets will be higher. >> pepsico ceo indra nooyi on one of the strategies that she's putting in place to go towards healthier offerings. the big announcement was fewer calories in the beverages, less salt and saturated fat in the food. they set some specific aggressive targets for themselves up until 2025, and this comes at a time when big food and beverage companies are struggling to meet consumer

demand to understand what healthy actually means. is it zbreeingredients, is it artificial, is it cutting calories, so pepsi is making a big leap and promise to investors and consumers and we'll see if it continues to post the good results it has been lately while it's making this big transition. >> for vending machines, though, you have to get the companies onboard to actually host them inside their four walls. interesting to hear her say california and tech companies, i.e., those who can probably afford -- >> i knew this was going to air on "squawk alley," so i wanted to make sure that silicon valley was on board. yes, she said there are 20,000 orders for this to go up, hello goodness machine they are talking about, in north america, and it's a change. millennials, you don't think of using vending machines. you think of it as sort of unhealthy snacks and carbonated beverages, but within these, there's a certain criteria that have to qualify in terms of the health benefits to put the food and beverages together.

it's kind of cool when you look at the screen. it's very technological forward. reminds me of their spire machine where you can touch screen, mix and match, if you want to gatorade, recommend this goes with that. the key is, though, growing, because this has been an industry that has been very challenged to grow. she said herself vending machines have been flat to down. >> is rnd more expensive as a rule when you're trying to be sustainable or healthy? >> absolutely, which is why they make a big effort to note today that the sustainability of conservation of water and renewable energies is a matter of cost savings. she cited $600 million to the bottom line in terms of what they've managed to do when they are dealing with water, but, of course, rnd has been ramping up at pepsico. instead of going out and buying other companies like a lot of the other food and beverage companies have been, they've been investing in innovation, things like a new frying technique that gets 20% saturated fat, they've started

using commercially in china. key is, a, do consumers notice the taste, because these are popular and healthy snacks and they can't sacrifice the sales, and, b, what's it going to cost. >> good stuff, thanks so much. sara eisen with the pepsico's indra nooyi. major averages down 31 points, pretty much like this most of the day. let's get over to rick santelli. what are you watching? >> you know, i'm watching all the different communications, whether it's e-mail, word of mouth, because in the day and age we live in, words matter. and some of the words i notice keep coming up every time when we talk about various issues. words like ad hoc, improvise, make shift, band-aid, short term. any idea what these words are referencing? any idea? come back after the break, we'll discuss it. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head.

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>> let's get over to the cme group, rick santelli, and get the santelli exchange. >> hi, carl. think about those words we just had on the board. ad hock, makeshift, band-aid, short-termism. it's all about policy. it's all about policy. policy is like, well, live in a rural area. somebody six miles away starts burning their leaves. 30 minutes later i smell it. i can't tell you where it's coming from, but the smoke always finds me. pollution in general. comes from the other side of the globe. wreckage in oceans of airplanes goes thousands of miles in the current. voluntari volcano ash, pollen, and discontent. discontent travels too.

especially considering those words we used to describe policy. whether you are looking at -- why do we talk about what a ten-year maturity yield is in europe or in the u.k., the euro zone, u.k.? what's going on in japan, united states, what? why do we look at all the equity markets? because all of this is just like all of these. that policy drifts over. we become contained. if the price of money is raised below somewhere in the computer age, it affects everybody. you can convert your yen into dollars, dollars into pounds, pounds into yuan. can you do it all. it's all basically the seam. this is an important aspect when it comes to discontent. on the days of brexit vote, 76%, this is the betting polls. not the actual predicting polls. the betting poll. we're at 76% in the morning. by the end of the day they were close to 86%. now, right now those same betting polls in the u.s. are

around 80-20. i'm being forgiving. this is in favor of hillary, and not in favor of donald trump. give him the benefit of the doubt. even 75-25. you see what i'm saying here. i'm not giving you any conclusions about how any of this is going to turn out. one thing i could tell you for sure, we all share markets. we all share each other's debt. we share each other's stimulus, and if they're going to put car x, y, z on sale over there or an iphone burns up over here, it affects everybody. every company. there are no borders. why can we understand that and we don't understand this? no matter how the selection turns out, this is not going awayfully time soon. for all those who think it's completely figured out, says my advice is think again. kayla, back to you. >> thanks so much. rick santelli in chicago. you know what, you know it from the opening credits of "full house" and now san francisco's most iconic home is going green. we'll take you there. up next. ♪

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where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. . an historic home in san terrific is going green. didi roy is there this morning. hey, didi. >> this is a historic victorian home that's had solar panels installed, and, by the way, if

it looks familiar to you, it probably is. that's because it was featured in the opening of the hit sit com"full house." among the row of historic homes named the painted lady. they decided to go solar. >> functionty stays the same. basically all the appliances work as they did before. we do have a little bit more of a battery powered backup system in case of power loss. by and larnl, having a solar system on the roof doesn't impact us day to day. we just feel good about the power that we consume. >> the solar company they use, sun run rs says under their program homeowners don't have to pay for the installation, but they do have to switch over to sun run to manage their electricity for 20 years under a locked rate. the company says customers typically save 20% on their electric bills after going

solar. >> the benefits of going solar are cheaper electricity. you don't have to compromise to switch over to solar, and that's news to a lot of people. not expected to -- and part of the reason though that explosion of growth is a federal government tax credit that was supposed to expire at the end of this year. instead it's been extended to 2020, and that's incentiveized a lot of consumers to make that switch. back to you, guys. >> stopped going up, right? in some cases even going down. >> the aesthetics of especially historic homes like that are what people have not wanted to dilute with solar offerings, but more and more the value prop zpligs is changing, and they're getting on board with it. >> for sure. in terms of market action, the tape remains obviously relatively muted.

hasbro up almost 7% on earnings. speaking of earnings, we're going to get a lot more tonight after the bell. united airlines before the onslaught next few days here. >> we have a couple other movers today here. we should mention mcdonald's, which had a couple of high level executive departure. stock down 1%. tons of changes at that company. a couple of those executives were soon to retire anyway, but nonetheless, the street is still digesting exactly what that means. mentor graphics. it's up 53% this year. it is up again today about 3%. reuters reporting that the company has hired a bank to explore strategic alternatives, including potentially a sale. we'll see what happens there. >> been a busy morning. caterpillar ceo says he will step down. see what that means for that industrial. would be another high level departure after john stumpf left over at wells, which was downgraded today, by the way, over at kbw. cramer with a lot of thoughts this morning on banks. that wells scenario sort of is a bit of a cautionary tale for 134

who want to jump in. >> bank of america today said it's not worried about cost selling, so at least crossing off an issue for investors there. >> yeah. then finally tomorrow, we'll talk to tim westergren of pand ora asking about somebody's thaulgts of what would it mean if apple got into a bundle of its own. let's get over to the judge at hq. carl, thanks so were. welcome to a special halftime report. today we mark this show's fifth anniversary. from the very start we have strived to showcase real money and real debate, a place for the world's biggest and best investors. it is only fitting that today we have three marquee names on this program. jeffrey gundlach. carl icahn, the chairman of icahn enterprises, widely considered wufrt greatest investors of our time. both will be here in just